Claims Conference Leaders must Resign Now!

May 22, 2013

Over the past few days, there have been additional mind-boggling exposures of further scandals, lack of transparency, cover-ups and ethical failures at the highest possible levels of the Claims Conference leadership and management. Unless these latest reports appearing in the Jerusalem Post and JTA are refuted, we must demand the immediate resignations of all those engaged in the subterfuges.

It was in April 2007 that I wrote the first of 15 articles calling for a reform of the Claims Conference and appealing to the Board to ensure that wherever possible, all funds being directed to general projects be frozen and instead steered towards ameliorating the plight of the desperate elderly and ailing survivors unable to afford food, medicine and basic necessities of life. I repeatedly stated that it was our obligation as Jews, and in particular the duty of the Claims Conference, to ensure that these survivors would live out their remaining years with a modicum of dignity.

The response of the Claims Conference to me and other critics avoided the key issues and amounted to personal abuse and hysterical efforts to intimidate the media, even threatening them with libel proceedings.

When the $57 million fraud was discovered in 2009, the Claims Conference board carried a series of resolutions praising its impeccable management and supervision. Chairman Julius Berman lauded his chief executive Greg Schneider, as a hero for having exposed the fraud and his alleged exemplary performance of duty.

This, despite the fact that more than $57 million was stolen over a period of 15 years with the connivance of a senior manager in the Claims Conference’s New York head office, and none of the senior leadership was willing to accept responsibility or accountability.

Such behavior would never have been tolerated in any public or government instrumentality. Resignations at key levels would have been immediate and mandatory.

This latest scandal was only exposed due to a fortuitous exchange between the defense and prosecution in the course of the trial of the Claims Conference manager convicted as the ringleader of the fraud, which was astutely noted and followed up by Forward’s Paul Berger. Otherwise, to this day we would have been unaware that the senior members of the Claims Conference management and that the leadership and management had been warned of the nature of the scam in an anonymous 2001 letter, but had failed to effectively follow up. Indeed, at the trial, the current CEO Greg Schneider even had the gall to allege that he was “shocked” when he first learned in late 2009 about the fraud that he and his colleagues (including former CEO Gideon Taylor and other senior management personnel) had failed to prevent.

A storm erupted once these facts were revealed. World Jewish Congress President Ronald Lauder, a Claims Conference board member, demanded to know if and when the board was informed of the 2001 letter alerting the Claims Conference to the fraud. He also expressed his frustration with the management of the Claims Conference by setting up a WJC Task Force to investigate the matter.

The initial responses from the Claims Conference leadership were incoherent and contradictory. At first, the spokeswoman said the matter was closed and that there was nothing more to be said. Other spokespersons then began making excuses for the failure of management to follow-up the 2001 letter. Ultimately, they laid the entire blame on Karl Brozik, a director in the Berlin office who died in 2004 aged 78 and is obviously unable to defend himself. To lay the blame on a person who was in Berlin and not even located in the NY office in which the fraud took place and unable to respond because he is deceased, speaks for itself.

That the management was incompetent and failed to adequately act as a trustee for these funds, is now no longer in dispute.

But ultimately, what has totally destroyed the credibility of both the management and leadership of this organization is not merely the negligence – which itself reached frightening proportions – but the cover up.

Had the leadership and management acted honestly and taken responsibility for their failures, they would not face a scandal of such a vast scale.

One should bear in mind that it was not the Watergate scandal that finally brought down President Nixon. It was the cover up.

We are entitled to now assume that the desperate resistance to the repeated calls for an independent investigation was due to the fact that both the management and the chairman Julius Berman were concerned that it could expose their personal failures which failed to stem the theft of at least $57 million earmarked for survivors.

This issue becomes more pertinent following yesterday’s mind-boggling discovery by JTA’s Uriel Heilman that Julius Berman himself (in his then capacity as Counsel to the Claims Conference) was advised in 2001 and fully aware of the fraud allegations and even undertook to probe the matter. He effectively lied when he informed board members that the first he heard about the scam was when Schneider drew it to his attention.

Having regard to Berman’s own personal involvement and failure in the matter, it is shocking that he would permit his spokespeople to lay all the blame for this enormous fraud on one of his deceased former colleagues in Berlin. This is not merely a breakdown of transparency, but amounts to morally inexcusable and unconscionable behavior and represents a breach of trust. It makes him unfit to hold office in any Jewish organization, least of all the organization disbursing billions of dollars and designated as trustee on behalf of the Jewish people for sacred restitution funds.

In response to these exposures, Jewish Agency Chairman, Natan Sharansky, has now belatedly called for an independent review of the organization.

That is not enough. Unless the facts referred to above are demonstrated to be false, Julius Berman, the senior management and professionals responsible for the lack of oversight enabling the fraud or engaged in the subsequent cover up must resign forthwith.

The members of the board of the Claims Conference have much soul-searching to do. They were all urged to call for an independent review of the organization years ago. Had they done so, we could have been spared this scandal and shame. They should now try to make amends by reforming the organization, replace the management and seek to ease the plight of the survivors.

I would hope that Reuven Merhav, the head of the Claims Conference Executive Committee and former Director General of the Israeli Foreign Ministry, assumes an major role in a revamped organization. I have known Merhav for over 30 years and frequently collaborated with him on international Jewish affairs. He is a man of unquestioned integrity and represents the antithesis of the arrogance and lack of transparency displayed by the current leadership.

We can only pray that a new leadership team will represent the aspirations and ethics of the Jewish people and conduct itself accordingly.

That this scandal was permitted to compromise the standing of the Jewish people reinforces Lord Acton’s dictum “power corrupts and absolute power corrupts absolutely”.